Page 179 - SARB: 100-Year Journey

The SARB’s response to the COVID-19 crisis
Overall, there is agreement that South Africa was able to mount a credible monetary and fiscal response during the financial crisis of 2008−09. That is notwithstanding the million jobs lost in the real economy and the recession of 2009, neither of which were long-lasting.
Marcus bade the SARB farewell in 2014 after an eventful one term as Governor. Soon thereafter Kganyago was appointed Governor of the central bank. Undoubtedly, the monetary policy response to the COVID-19 crisis will be synonymous with his time as SARB Governor in years to come.
The year 2020 started like any other everywhere around the world, except in Wuhan, China. There, health authorities began the New Year fighting the spread of a respiratory virus. Soon, cases were detected in Europe, then the US and other regions. Africa’s first case was recorded in Egypt. Suddenly, the virus had spread across the globe. A pandemic was declared. National shutdowns were implemented to minimise the spread of the coronavirus.
The South African government instituted a hard lockdown in March 2020. Social distancing, masks, sanitising and restrictions on movement were the new normal.
Globally, supply chains ground to a halt. The movement of goods in and out of countries was severely curtailed and disrupted. The pandemic took on an economic dimension. Industries collapsed, most notably tourism – a critical source of revenue for some countries. Export-dependent economies were also especially vulnerable. Furthermore, capital took flight from emerging markets and went in search of safe havens. South Africa suffered significant outflows in that regard.
But central banks are designed to fight crises. “That is so because central banks possess tools in their arsenal which governments don’t have,” pointed out Naidoo. “They can print money. They can make money out of thin air. They often do come to the fore ... [and] take on prominence during a crisis that they don’t take on under normal circumstances.”
Indeed, the SARB came to the fore when COVID-19 struck, deploying a suite of measures and interventions which were executed with uncharacteristic swiftness.
“I think the SARB acted boldly. There will still be people who argue that we should do more,” was Naidoo’s assessment of the SARB’s response.
In March 2020, the South African government introduced a hard lockdown to stem the spread of COVID-19. Long Street in Cape Town, pictured here, usually a bustling scene of activity, was uncharacteristically quiet during the period, a scene repeated throughout the country. /Ziyaad Douglas/Gallo Images via Getty Images
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